If you are leaving work for a health related reason - for example medical leave for treatment of an illness, short or long term disability, or other medical reason - it may be imperative to find out about whether you can take your life insurance policy with you when you go!
Usually, if you have life insurance through a group policy at work, when you leave employment you have a right to convert that insurance into an individual policy. This right is guaranteed in the majority of states (see a list of some, but not all, states statutes at the end of this blog post for examples.)
When you purchase a life insurance policy, you are usually required to answer questions about your current and past health conditions, and maybe submit to some type of medical exam. This is so the insurer can decide how big of a risk you are,whether they even want to give you a policy, and how much they want to charge you in premiums. Their investigation of your health is called medical underwriting.
However, when you convert your group policy from work, you do not have to undergo any medical underwriting. You are guaranteed the right to continue your policy, although it will likely be for a higher premium than you were previously paying.
If you are leaving your job for a health related reason, it may be difficult for you to obtain life insurance again because of your medical history. It is therefore very important to find out the costs of and process for converting your group policy to an individual policy. In some states depending on the insurance policy's language, an insurer may not be required to notify you. So it may be the responsibility of the employee to find out whether they can convert their life insurance, and how to do it.
The moral of the story is: be proactive and find out the price and procedure for converting your life insurance policy. Be especially sure to find out the time limit to submit any required premiums and paperwork, since most policies have a very short time frame in which to complete the conversion process. Request the paperwork, even if you are unsure whether or not you want to go through with the conversion, so you have everything you need in case you do decide to convert.
(State statutes regarding life insurance conversion from a group policy into an individual policy: Arkansas, Ark. Code Ann. §23-83-122; California, Cal. Ins. Code §10209(b); Delaware, 18 De. Code Ann. Tit. 18 §3125; Georgia, O.C.G.A. §33-27-5; Illinois, 215 Ill. Comp. Stat. Ann. 5/231.1(h); Massachusetts, Mass. Gen. Laws ch. 175 §134A; Minnesota, 61A.09, subd. 1(h); New Jersey, N.J. Stat. Ann. §17B:27-73; New York, N.Y. Ins. Law §4216(d); Pennsylvania, 40 Pa. Cons. Stat. Ann. §532.7; Tennessee, Tenn. Code Ann. §56-7-2305(c).)